I'm an associate editor at Forbes, part of the team responsible for our signature issues: The Forbes 400, Global Billionaires and America's Richest Families. As a writer, I cover these wealthy business builders as well as other entrepreneurs. Before Forbes, I also reported on entrepreneurs for Inc. magazine, and attended Syracuse University's S.I. Newhouse School of Public Communications.

U.S. Will Reach Debt Limit Dec. 31--And Begin To Have Trouble Paying Bills

The U.S. federal government will soon run short of money once the country reaches its borrowing limit on Dec. 31. Within weeks, there will be an unprecedented shortage in the nation’s coffers, Treasury Secretary Timothy Geithner says in an open letter to Congress.

If the debt ceiling is not raised by Congress—the legislature retains that power because of its ability to control taxes and spending—then receipts of all kinds will go unpaid, from Medicare and Medicaid benefits to government salaries. It would likely roil financial markets much the way the debt debate in August 2011 did, and it could prompt a downgrade of America’s credit rating.

The debt ceiling remains a chip in the brinkmanship game between Democrats and Republicans over the fiscal cliff. Democrats would like Republicans to extend the debt ceiling as a show of good faith to engender a compromise. Republicans are holding out, hoping to use the debt ceiling as way to possibly win concessions from Democrats. Under the Democrats’ plan, the Bush Era tax cuts would extend only to Americans earning less than $250,000. The GOP want the tax cuts unchanged.

Geithner says he will use “extraordinary measures” to keep the books open, but with all the uncertainty around tax revenue next year, he says, the Treasury Department is unsure how long it can keep paying. Geithner estimates the government accumulates $100 billion in debt in an average month. These extraordinary measures, which have been used in past debt crises, might bring in $2oo billion, he says, allowing the government to continue operating into February or even March without a deal to raise the ceiling.

Geithner addressed the letter to Senate Majority Leader Harry Reid, a Democrat, but sent copies to leaders of both parties.

A brief reminder of what happened during the last debt ceiling debate in the summer of 2011 (a period where Congress agreed to let the nation borrow more, but effectively punted on the matter with an agreement that ultimately led to the fiscal cliff): The major stock indices lost as much as 10% from mid-July to mid-September. The deadline was originally August 2, but pols quickly blew past that. The fiasco threatened to sap the weak recovery and push the nation into a double-dip recession. As it was, the U.S. managed little more than 2% growth in that period.

Back then, the Bipartisan Policy Center estimated the government wouldn’t be able to pay 44% of its bills within a month, a figure probably not too far off from what might happen next month.

You can see that the debt debate, as well as the fiscal cliff, is troubling the market. The Dow Jones industrial average has fallen for three straight days.

The blue chip index this morning opened flat. The Nasdaq declined 0.1% to 2,986.19. The S&P 500 was also unchanged.

Technology stocks led the Nasdaq’s fall. Marvel Technology, which will need to pay a $1.2 billion fine to settle a patent dispute, fell 3%. Apple lost 0.3%.

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